Brazil's President Dilma Rousseff announced a cabinet reshuffle in October to keep her allies on board and block efforts to impeach herReuters / Ueslei Marcelino

Official impeachment proceedings have been initiated against Brazilian President Dilma Rousseff after the speaker of the lower house of Congress, Eduardo Cunha, accepted one of 34 impeachment requests against her. The request is based on allegations that the president violated the fiscal responsibility law by manipulating accounts to veil budget deficits in 2014 and 2015.

Rousseff is also accused of receiving illegal funding from state-run oil company Petrobras through alleged kickbacks for her re-election campaign.

"I am outraged by the decision," Rousseff said in a televised speech in Parliament. "I haven't committed any wrongful act."

A federal audit court had noted in October that the government's borrowing from public banks Banco do Brasil and Caixa Econômica Federal to pay for social programmes, such as family grant and unemployment insurance, resulted in budgetary shortfalls. This type of loan is forbidden by the fiscal responsibility law because it is considered a way to manipulate public accounts.

The petition will now be placed before a special committee consisting of members from all political parties. The panel must issue a recommendation on whether the hearing should start. After that, the proposal needs the support of at least two thirds of the deputies — 342 of the 513 votes — in the lower house.

If the proposal is cleared, Rousseff will have to temporarily hand over power to Vice President Michel Temer until an inquiry is conducted by the Senate, which could last for several months. The final decision would then have to be approved by a two-thirds majority in the upper house. In case the procedure hangs in the Senate for more than 180 days, Rousseff will be entitled to reclaim her position.

Owing to the political drama and corruption scandals, Brazil has been engulfed by economic woes with the gross domestic product now shrinking at an annualised rate of almost 7%, according to Bloomberg, and the budget deficit swelling to the widest in two decades. Brazil's currency and local bond markets have posted deeper losses this year. Foreign investment has dropped since the Petrobras scandal hit headlines.